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Flashcards in Sun Life TRAD Reviewer Deck (162)
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1

A life insurance agent is permitted to
a. Approve an application for insurance
b. Waive any of the requirement of the company
c. Guarantee dividends on participating policies
d. Prepare routine proposals for life insurance coverage

d. Prepare routine proposals for life insurance coverage

2

Claire is considering purchasing either an endowment or term life policy. What do these policies
have in common?
a. Insurance protection will be limited to a specified period
b. Renewal and conversion privileges are available
c. No cash value is available to the policy owner during the term of the policy
d. A benefit will be paid at the end of the period of coverage if the person is then alive

a. Insurance protection will be limited to a specified period

3

A client tells you that his bank wants him to use his insurance policy so that his bank loan will be
paid off if he dies. Which of the following will you recommend?
a. He appoints an irrevocable beneficiary
b. He makes an absolute assignment
c. He makes a collateral assignment
d. None of the above

c. He makes a collateral assignment

4

If premiums are being waived under a waiver of premiums benefit and the insured dies, which
of the following with the proceeds be?
a. Reduced paid-up face amount
b. Face amount less unpaid premiums
c. Cash surrender values
d. Face amount

d. Face amount

5

Which of the following is a living benefit in an insurance policy?
a. Guaranteed insurability benefit
b. Right to change beneficiaries
c. Waiver of premium for disability
d. Cash surrender value

d. Cash surrender value

6

Insurable interest is necessary when a person insures another ____.
a. So that the person being insured may be properly appraised
b. To establish that there is a genuine risk
c. Because interest on premiums must be entered
d. To make sure that he will pay the premiums

b. To establish that there is a genuine risk

7

Your client George wants to apply for a life insurance policy. As his advisor, you would advise
him to do all of the following, EXCEPT which one?
a. Furnish initial information as to insurability
b. Give details pertaining to non-forfeiture options
c. To convey to the company the desire of the applicant to obtain insurance
d. To furnish information on which the contract of life insurance may be written

c. To convey to the company the desire of the applicant to obtain insurance

8

Which of the following does a limited pay life policy provides?
a. Protection for the life of the policyholder with premiums payable for a limited term of
years
b. Low-cost protection only for a limited term of years with no savings
c. The highest level of savings for the insured within a specified term of years
d. Protection with premiums payable for life and a low level of savings as an alternative to
continued protection in old age

a. Protection for the life of the policyholder with premiums payable for a limited term of
years

9

When you bought an insurance policy on your wife’s life, you were 27 and she was 26, but you
stated that you were 26 and she was 27. Five years later, your wife died. Which of the following
will the insurer pay?
a. The face amount adjusted for misstatement of age
b. Slightly less than the face amount
c. The sum of the premium paid
d. The face amount

b. Slightly less than the face amount

10

Group life insurance covers ____.
a. Death provided it is during working hours and in the place of employment
b. Death of the employee regardless of cause except suicide during the first year
(sometimes two years)
c. Accidental death only
d. Only death by heart attack, pneumonia or cancer

b. Death of the employee regardless of cause except suicide during the first year

11

Your client tells you that when his father died, he received P500,000 free of Estate Tax, and that
he had not even known that his policy existed. Which of the following classifications did your
client fall under?
a. Collateral assignee
b. Absolute assignee
c. Revocable primary beneficiary
d. Irrevocable primary beneficiary

d. Irrevocable primary beneficiary

12

Mr. Sy walked out of his house one night, and was never heard from since. His wife wanted to
make a claim on his insurance policy, as she believes that he is dead. In this case, which of the
following statements is correct?
a. It will take four years before the court could declare him legally dead.
b. It will take seven years before the court could declare him legally dead.
c. The company will pay immediately.
d. It will require 6 months before the court could declare him dead.

b. It will take seven years before the court could declare him legally dead.

13

In life insurance, which of the following does the term “substandard rates” generally refer to?
a. Premiums charged for policies with low amounts
b. Premiums charged to persons who are considered to be higher-than-average risk
categories
c. Mortality rates that are lower than the rates suggested by the regulatory authorities
d. Mortality rates that are lower than those expected by the company according to its
mortality table

b. Premiums charged to persons who are considered to be higher-than-average risk
categories

14

Life insurance policy loans are limited to an amount which with interest will not exceed the ___.
a. Cash value of the policy
b. Total premiums paid
c. Net amount of risk
d. Present value of future premiums

a. Cash value of the policy

15

What happens to a policy when an irrevocable beneficiary has been designated and the policy
owner needs to loan against his policy for a specific reason?
a. Alter the dividend option now in effect
b. Any transactions or changes in the policy would need the endorsement of the
irrevocable beneficiary
c. Avail of a non-forfeiture option
d. Borrow minimal cash loan

c. Avail of a non-forfeiture option

16

The fundamental advantage of the use of life insurance as a means of meeting economic losses
is that through life insurance, these losses are
a. Reduced for the group as a whole through the multiplier effect
b. Deferred for a specified period of time
c. Met as they rise through savings accumulated on an assessment basis
d. Spread over a large number of people

d. Spread over a large number of people

17

Which of the following statements is FALSE?
a. When an agent makes a sales presentation, he has to sell confidence in the product.
b. When an agent meets a prospect for the first, he has to sell confidence in himself.
c. The primary job of an agent is to get people happily involved with the ownership of his
policy.
d. The job of an agent is to squeeze as much money as possible out of making a new sale.

d. The job of an agent is to squeeze as much money as possible out of making a new sale.

18

What will happen if the insured fails to pay the interest on a policy loan during its policy
anniversary?
a. Terminate the contract
b. Refuse to grant future additional loan
c. Increase the present loan by the interest
d. Demand full settlement of the loan

c. Increase the present loan by the interest

19

If a policyholder changes his occupation without notifying the company, would it affect the
benefits under his policy?
a. No, benefits and premiums may only be changed at the renewal date of the policy.
b. Yes, unless the policy specified otherwise. If he engaged in a more hazardous
occupation, his benefits may be pro-rated.
c. No, benefits agreed upon at the inception of the policy may not be changed.
d. None of the above.

c. No, benefits agreed upon at the inception of the policy may not be changed.

20

If a policy owner avails, of a claim, what are his basic settlement options?
a. Double indemnity, total, and permanent disability waiver
b. Fixed amount, fixed period, life income, interest on deposit
c. Policy loan, guaranteed insurability
d. Cash surrender value, automatic premium loan

b. Fixed amount, fixed period, life income, interest on deposit

21

A businessman has arranged for a development loan that will available 1 year from now.
Because he is unable to wait until then he has arranged an interim loan with his bank. The only
problem is that the bank wants loan secured against the risk of his death. What is the best
economic arrangement that you recommend?
a. Decreasing term
b. Interim term
c. Extended term
d. Yearly renewable term

d. Yearly renewable term

22

In which circumstance does an insurance company have the right to rescind a policy?
a. Insured person is killed in military action during the contestable period of the policy
b. Insured person intentionally kills himself during the suicide exclusion period specified in
the policy
c. Company discovers during the contestable period that the application contains a
material statement
d. Company discovers at any time that the policy owner was actually a minor at the time of
application

d. Company discovers at any time that the policy owner was actually a minor at the time of
application

23

A prospect tells you that he wants to be insured at age 65, but he does not want to pay more
than the minimum possible level of premiums. Would you offer him?
a. Endowment policy
b. Term policy
c. Whole life policy
d. A life at age 65 policy

b. Term policy

24

An applicant want to get a participating policy that will have the maximum cash available for
emergencies. Which of the following should he select?
a. Accumulated dividends
b. Extended term insurance
c. Loan value
d. Paid-up addition

a. Accumulated dividends

25

The following statements are true with respect to reinstatement process EXCEPT ____.
a. Assumption or repayment of any indebtedness
b. Written assurance of intent to keep the policy in force
c. Payment of back premiums with interest
d. An application for reinstatement

b. Written assurance of intent to keep the policy in force

26

. If the person, whose life is insured, dies during the grace period, and the premium was not paid,
which amount of the following will the insurance company usually pay to the beneficiary?
a. Cash surrender value of the policy minus the unpaid premium
b. Full face amount of the policy
c. Total premiums paid up to the date of birth plus interest
d. Face amount of the policy minus the unpaid premium

d. Face amount of the policy minus the unpaid premium

27

Which of the following best describes a person’s human economic value?
a. Total value of the individual’s tax contribution to the national economy
b. Total value of his physical assets
c. The amount of capital required to replace family income needs
d. Total value of the assets and any future earnings derived therefrom

d. Total value of the assets and any future earnings derived therefrom

28

The basic purposes of a conditional premium receipt are to acknowledge payment of initial
premium for life insurance and to ____.
a. Eliminate the need for acceptance of the offer in forming the contract
b. Provide insurance coverage earlier than the policy delivery date if certain requirements
are met
c. Guarantee that a policy will be issues as applied for
d. Backdate the policy to save age

b. Provide insurance coverage earlier than the policy delivery date if certain requirements

29

Which of the following statements best describes a Pure Endowment policy?
a. It pays proceeds to the insured only if he lives to the end of a specified period.
b. It pays proceeds to the insured if he lives to the end of endowment period, or pays the
face amount to named beneficiary if the insured dies before the end of the endowment
period.
c. It is actually a combination of endowment insurance and term insurance.
d. None of the above.

a. It pays proceeds to the insured only if he lives to the end of a specified period.

30

Which of the following considerations is required by the life insurance company to make the
insurance coverage effective?
a. Beneficiary’s continuing insurable interest in the life of the insured
b. Payment of the initial premium
c. Applicant’s promise to act in good faith
d. Payment of each renewal premium before the end of applicable period

b. Payment of the initial premium

31

Gwen is thinking of electing the paid-up insurance option, what will happen to her policy if she
does?
a. The premiums cease and protection continues with a reduced amount of coverage.
b. The premiums stop and the policy continues for the full face amount until age 65.
c. The insurance continues at a reduced amount and with a reduced premium.
d. The policy will automatically terminate.

a. The premiums cease and protection continues with a reduced amount of coverage.

32

The company usually allows a policy change from a higher premium to a lower premium if the
insured ____.
a. Momentarily assigns the policy to the company
b. Buys a new plan altogether
c. Presents satisfactory evidence of insurability
d. Obtains written consent from his or her spouse

c. Presents satisfactory evidence of insurability

33

An applicant wants a participating policy where the death benefit will be maximized. Which of
the following should he choose?
a. Paid-up additions
b. Accumulated dividend
c. Extended term
d. Paid-up insurance (reduced insurance)

a. Paid-up additions

34

. Which statement is false when the new owner borrows on a policy?
a. If a large loan is taken after the policy has been in force for some years, the interest cost
may exceed the premium.
b. Dividend will be reduced by the amount of the current interest.
c. The policy will lapse if, after reasonable notice, the indebtedness exceeds the cash
value.
d. The proceeds of the policy will be reduced by the amount of unpaid loan plus interest, if
the insured dies.

b. Dividend will be reduced by the amount of the current interest.

35

Which of the following does a whole life provide?
a. Protection for the life of the policyholder with premiums payable for a limited term of
years
b. Low cost protection only for a limited term of years with no savings
c. The highest level of savings for the insured within a specific term of years
d. Protection with premiums payable for life and low level of savings as an alternative to
continued protection in old age

d. Protection with premiums payable for life and low level of savings as an alternative to
continued protection in old age

36

In practice, most claims for the death benefits of life insurance policies are ____.
a. Investigated thoroughly for evidence of misrepresentation or fraud before payment is
made
b. Paid on the first policy anniversary after the death of the insures
c. Settled by interpleader proceedings
d. Paid promptly as soon as properly completed claim forms are received by the company

d. Paid promptly as soon as properly completed claim forms are received by the company

37

The following statements concerning insurable interest are correct, except:
a. It is deemed to exist if economic loss would occur at the death of the insured
b. It is deemed to exist by virtue of a relationship by blood or by marriage
c. It is important for purposes of underwriting the risk
d. Everyone has an insurable interest in his own life

c. It is important for purposes of underwriting the risk

38

Which policy permits the policyholder to vary the level of premiums, the sum insured, and has
its cash values dependent on the investment performance, and the level of premiums paid?
a. Universal life
b. Participating whole life policy
c. Participating endowment
d. None of the above

a. Universal life

39

How does life insurance directly contribute to the welfare and progress of the country?
a. By partially relieving the community of the care of the dependents
b. By encouraging provision for the future
c. By accumulating capital for investment in commerce and industry
d. All of the above

d. All of the above

40

When is waiver of premium in effect?
a. Disability must be total
b. Disability must be permanent
c. Both a and b
d. Either a and b

c. Both a and b

41

In an life insurance company, risk appraisal is necessary to:
a. Prevent anti-selection
b. Project dividend rates for participating policies
c. Collate mortality statistics
d. Calculate the mortality rate for a given policy

a. Prevent anti-selection

42

. Limited payment life policies are called as such because those policies _____.
a. Shorten the period when the benefits may be paid
b. Limit the period during which the premiums are payable
c. Limit the conditions under which the policies are payable
d. Limit the number of beneficiaries, thereby, minimizing the problems of paying too many
people

b. Limit the period during which the premiums are payable

43

Which of the following is a settlement option?
a. Cash surrender value
b. Extended term insurance option
c. Policy loan
d. Interest on insurance proceeds

d. Interest on insurance proceeds

44

The following statements about “Disability Waiver of Premium Rider” are true, except:
a. There is a waiting period
b. Disability must occur before a stated date
c. The insured has to die while disabled
d. It has to be attached to a life insurance policy

c. The insured has to die while disabled

45

Which of the following statements is false?
a. Too many lapsed policies can cause an agent’s agreement to be cancelled.
b. When a policy lapses, the agent loses a valuable source of prospect.
c. When a policy lapses, the agent loses all future commissions on renewal premiums.
d. Agents with persistent business seldom stay long with one company.

d. Agents with persistent business seldom stay long with one company.

46

Under an endowment policy, if the person whose life is insured survives to the end of the
period stated in the policy, the ___.
a. Policy will terminate without value
b. Face amount of the policy be paid
c. Policy will automatically be converted to paid-up whole policy
d. The extended term insurance will be brought into effect

c. Policy will automatically be converted to paid-up whole policy

47

“Critical years” in the programming of life insurance means:
a. Retirement years
b. Years between the time the youngest child is 15 years old and the mother is 62 years old
c. Years immediately following the insured’s death
d. Period during which the children are small, and cannot provide for themselves

d. Period during which the children are small, and cannot provide for themselves

48

. Jared wants to update his yearly renewable term life insurance policy. Which of the following
applies to a yearly renewable term life insurance?
a. The policy owner may renew the policy only once.
b. Evidence of insurability shall be required every renewal.
c. Cash values will increase for as long as the policy is in force.
d. Premiums shall increase every time the policy is renewed.

d. Premiums shall increase every time the policy is renewed.

49

The Insurance Commissioner has the power to revoke or refuse an agent’s license in all of the
following instances, except:
a. When the applicant for license has intentionally withheld information concerning his
conviction of a crime involving moral turpitude
b. When the agent has diverted any premium collection for his personal use
c. When an agent influences the applicant’s choice of plan to be purchased
d. None of the above

c. When an agent influences the applicant’s choice of plan to be purchased

50

Life insurance application usually carry large amount of information that ____.
a. Relates to the insurability of the applicant
b. Identifies the applicant
c. Describes the desired benefits and mode of payment
d. Describes the type of insurance applied for

a. Relates to the insurability of the applicant

51

Which rider could greatly increase the total life coverage of a permanent basic policy?
a. An accidental death benefit rider
b. A supplemental term rider
c. An interim term rider
d. None of the above

b. A supplemental term rider

52

When does an interpleader come into play?
a. To decide conflicting claims on the same insurance proceeds
b. To determine if the cause of the insured’s death was an excluded risk
c. To recommend the best settlement options for the beneficiary if the interest on a policy
loan is not paid at the policy anniversary of the insurance
d. To resolve the question of insurable interest

a. To decide conflicting claims on the same insurance proceeds

53

When does insurable interest must exist?
a. At the inception of the policy
b. Throughout the premium paying period
c. Until the maturity date of the policy
d. For as long as the insurance policy remains in force

a. At the inception of the policy

54

How does the law of probability help life insurance companies?
a. Predict when an individual insured will die
b. Estimate future death rates among members of a given group
c. Determine the experienced death rate among the insured persons
d. Develop statistics of past deaths among the general population

b. Estimate future death rates among members of a given group

55

If Phoebe wants to continue her renewable term insurance, which of the following she may do?
a. Change the life insured at renewable date
b. Renew at the same premium for further period of years
c. Renew providing the insurance company agrees to continue coverage
d. Renew the coverage based on a higher premium

d. Renew the coverage based on a higher premium

56

Mr. Barrio has been insured under the employee group life insurance plan for several years.
Which of the following will happen to Mr. Barrios’ group life insurance if he leaves this job?
a. Changed, upon the employer’s notice to the insurance company, to a permanent plan of
insurance for the same amount
b. Continue to provide coverage of the same amount for a period of 31 days during which
Mr. Barrio can convert to an individual policy

b. Continue to provide coverage of the same amount for a period of 31 days during which

57

A whole life policy with an initial premium rate that applies to the first five (5) years of the
policy and a higher premium rate that applies to the remainder of the premium-payment
period is known as ____.
a. An extended life policy
b. A modified life policy
c. An experience-premium policy
d. A guaranteed renewable policy

b. A modified life policy

58

What is the purpose of the incontestability clause?
a. Permits that company to pay claims within two (2) years
b. Gives the company the right to rescind a policy at any time
c. Prevents the company from denying a claim after the policy has been in force for two (2)
years
d. Makes it necessary for the beneficiary to present proof of death in the event of a death
claim

c. Prevents the company from denying a claim after the policy has been in force for two (2)
years

59

. In life insurance, there is always “agency” relationship between the ____.
a. Beneficiary and the insurance company
b. Insured and the insurance company
c. Soliciting agent and insurance company
d. Policyowner and the soliciting agent

c. Soliciting agent and insurance company

60

Clark applied for a Ps. 20,000 whole life policy, and paid the full initial premium to his agent,
who issued a binding receipt. Under such scenario, what does the insurance company do?
a. Guarantee the policy will be issued as applied for
b. Offer permanent insurance coverage effective as of the date of the application
c. Immediately provides interim insurance that remains in effect until the policy is issued
or the application is declined
d. Promise that the insurance coverage will become effective as of the date of the
application is approved

c. Immediately provides interim insurance that remains in effect until the policy is issued
or the application is declined

61

Which of the following statement is correct?
a. Orphan policy owners hardly need an agent’s services
b. Orphan policy owners will only deal with their original agents
c. New agents should stay away from orphan policy owners
d. Orphan policy owners are good sources of prospect and new sales

d. Orphan policy owners are good sources of prospect and new sales

62

The widow of your policyholder tells that she does not want a lump sum payment, but she
would life to receive monthly allowance for the rest of her natural life. Which option do you
recommend?
a. Periodic annuity option
b. Life annuity option
c. Fixed period option
d. Fixed income option

b. Life annuity option

63

A risk is considered substandard based on any or all of the following criteria
a. Death, income, and educational attainment
b. Death, occupation, and moral character
c. Occupation, character, and family health history
d. Income, educational attainment, occupation

c. Occupation, character, and family health history

64

How are endowment life insurance and term life insurance the same?
a. Build up cash value rapidly in the early policy years
b. Provide for payment of the face amount if the insured is alive at the end of specified
period
c. Contain provisions for automatic continuation of the insurance protection at the end of
a specified period
d. Provide life insurance protection for only the period of time specified in the policy
contract

d. Provide life insurance protection for only the period of time specified in the policy
contract

65

A prospect tells you that he wants the maximum possible provision for his retirement with no
life coverage. Which of the following would you offer him?
a. Whole life policy
b. A life paid-up at age 65 policy
c. A 20-pay life policy
d. None of the above

d. None of the above

66

Some insurance companies charge females a lower premium rate the males. Which of the
following justifies the practice?
a. Women are less likely to lapse the policies
b. Generally, women have less hazardous jobs
c. Women have a longer life expectancy (after age 54) than men
d. Generally, women buy the higher premium rate policies, such as an endowment policy
or retirement income policy

c. Women have a longer life expectancy (after age 54) than men

67

At the end of 25 years, which statement is true for a 25-year Life policy and is not for a 25-year
endowment?
a. No further premiums are paid
b. The contract is terminated
c. The sum insured is paid
d. The insurance remains in-force

d. The insurance remains in-force

68

Which of the following sales practices determines a prospect’s complete financial requirement
before offering a policy?
a. Planned selling
b. Counselor selling
c. Multiple products selling
d. Total needs selling

d. Total needs selling

69

Insurance provides protection against economic loss by enabling the policy owner to ____.
a. Transfer responsibility for the loss to others
b. Take speculative risk to compensate for the loss
c. Reduce the possibility of the occurrence of the event causing the loss
d. Share the loss with others exposed to similar risk

d. Share the loss with others exposed to similar risk

70

. When is the only instance a life insurance contract is treated primarily as an indemnity
agreement?
a. A person insures the life of a friend
b. Creditor insures the life of his debtor to protect himself
c. Person insures the life of his or her spouse to protect against the loss of income earned
by the spouse
d. Person in a partnership insures the life of his partner to protect the firm against loss due
to the death of that partner

b. Creditor insures the life of his debtor to protect himself

71

Which of the following describes the convertible features of a term insurance policy?
a. It may be changed to another term insurance policy without evidence of insurability.
b. It may be changed for a guaranteed sum.
c. It may be changed to another whole life policy.
d. It may be changed to permanent insurance without evidence of insurability.

d. It may be changed to permanent insurance without evidence of insurability.

72

William chose a straight-premium whole life policy over a limited payment whole life policy.
What is the advantage of such purchase?
a. Liberal risk selection procedures
b. Concentration of premium payments during the period of highest earnings
c. More rapid accumulations cash values
d. More insurance protection for the same annual premiums outlay

d. More insurance protection for the same annual premiums outlay

73

Life insurance guarantees cash benefits for all the following except:
a. Clean-up fund
b. Family dependency period income
c. Educational fund
d. Mortgage

b. Family dependency period income

74

. The following have a legitimate insurable interest except:
a. An individual on his own life
b. An individual on the life of his spouse
c. A finance company on the life of its borrower
d. An individual on the life of his mistress

d. An individual on the life of his mistress

75

Which of the following best describes Participating Life Insurance policies?
a. Allow variation in the wording of certain provisions
b. Provide for the distribution of dividends to the policy owner
c. Develop profit which must be paid to stockholders
d. Permit beneficiaries to exercise certain ownership rights during the lifetime of the
insured

b. Provide for the distribution of dividends to the policy owner

76

What is the commuted value of an insurance policy?
a. The cash value of basic addition
b. The single sum of money which is equal in value to the discounted future payments
c. The cash value of the policy after the loan has been deducted
d. The paid-up value of the policy

b. The single sum of money which is equal in value to the discounted future payments

77

What is a policy that affords coverage for two or more persons simultaneously with the face
amount of the policy payable when any of the insured dies at which time the policy terminates
automatically?
a. Joint and Survivor Annuity
b. Double Duty Pesos Insurance
c. Joint Life Policy
d. Split Pesos Insurance Plan

c. Joint Life Policy

78

What is a provision in the permanent life insurance policy that grants full coverage for specified
period even if premiums are discontinued?
a. Paid-up insurance additions
b. Life income option pension
c. Reduced paid-up insurance
d. Extended term insurance

d. Extended term insurance

79

Which of the following does the savings element of permanent plans build up?
a. Dividends
b. Cash value
c. Maturity benefits
d. Death benefits

b. Cash value

80

To waive life insurance premiums under a typical waiver of premium for disability clause, the
disability of the insured person must be total, and which other condition?
a. It was expected to continue until death
b. It has continued for a specified period, such as six months
c. It has been caused by illness of a chronic nature, not accident
d. It has been caused by accident, not by illness of a chronic nature

b. It has continued for a specified period, such as six months

81

When are disability benefits not paid?
a. For self-inflicted injuries
b. If there is a loan against the policy
c. If all policy dividends have been withdrawn
d. If disability resulted from sickness only

a. For self-inflicted injuries

82

Setting aside possible legal impediments, which option would you recommend if an
endowment policy owner, at age 65, tells you that he wants to provide his church with a
monthly donation for as long as the church exists?
a. Interest option
b. Life annuity option
c. Fixed income option
d. Periodic annuity option

a. Interest option

83

A Family Income rider is specifically designed to ____.
a. Pay twice the face amount of the policy in the event of death.
b. Provide a monthly income from the date of death of the insured to some future date
specified in the contract
c. Provide an income for the adjustment period immediately following death
d. Provide a retirement income for the insured and his spouse

b. Provide a monthly income from the date of death of the insured to some future date
specified in the contract

84

Nicole want to enhance her exiting policy by purchasing a separate provision coverage for a
different nature. What would you recommend to her?
a. Deposit privileges
b. Dividends
c. Riders
d. Assignment

c. Riders

85

Applicants for life insurance with moderate physical impairments are called sub-standard risks
and ____.
a. Therefore cannot obtain life insurance in any company
b. May be insured at increased rates to compensate for the extra hazard
c. Are issued policies without any non-forfeiture values
d. Are required to pay premiums on an annual basis

b. May be insured at increased rates to compensate for the extra hazard

86

. Life insurance companies practice risk selection primarily to ____.
a. Guard against anti-selection
b. Establish dividend rates on participating policies
c. Determine policy reserve amount
d. Gather and test mortality statistics

a. Guard against anti-selection

87

What is the legal consideration for the promise made by the insurance company in a life
insurance contract?
a. Payment of renewal premium
b. Approval by the underwriters
c. Establishment of the reserve
d. Payment of the initial premium

d. Payment of the initial premium

88

Which of the following statements best describes a hazardous occupation?
a. An occupation in which the duties expose the insured to a degree of sustaining injury
b. An occupation in unhealthy working conditions exposing the insured to elements which
can cause sickness
c. An occupation which exposes the insured to social hazards
d. All of the above

d. All of the above

89

Which of the following is not true about insurance premiums?
a. The grace period is usually 31 days.
b. A premium is the legal consideration needed to effectuate a life insurance policy
c. Premiums which are paid quarterly or semi-annually are higher than those paid annually
d. Cash is required for all premiums paid in the grace period

d. Cash is required for all premiums paid in the grace period

90

Which of the following determines the extent of medical evidence required?
a. Occupation of the applicant
b. The age of the applicant and the proposed sum to be insured
c. Date of the last medical examination
d. Financial condition of the applicant

b. The age of the applicant and the proposed sum to be insured

91

Which of the following statements satisfies the requirement that the beneficiary should have
an insurable interest?
a. The insured and the beneficiary are engaged in a similar occupation
b. The insured belongs to the same club as the beneficiary
c. The insured is financially indebted to the beneficiary
d. The insured and the beneficiary regularly travel to and from work in a car pool
arrangement

c. The insured is financially indebted to the beneficiary

92

Most life insurance agents are expressly authorized to perform the following functions:
a. Solicit application for insurance, accept the initial premium, and issue a receipt on
behalf of the insurance company
b. Solicit and approve the application of the proposed insured
c. Accept initial premium, and waive the insurable interest requirement
d. Appraise applicants, and decide on a standard or sub-standard rating

a. Solicit application for insurance, accept the initial premium, and issue a receipt on
behalf of the insurance company

93

Helena owns a policy that is kept in force by paying the premiums on a semi-annual basis. If she
elected the non-forfeiture option. This means she ____.
a. Chooses a mode of settlement for the life proceeds
b. Discontinues premium payments for a whole life or endowment policy
c. Converts a term policy to a whole life policy
d. Renews a term life policy

b. Discontinues premium payments for a whole life or endowment policy

94

In order for an assignment of a life insurance policy to be binding upon the company, ____.
a. It must be made in writing and filed with the company
b. It must be of the limited type
c. The company must be satisfied that it is justified
d. The company must certify to its validity

a. It must be made in writing and filed with the company

95

Mr. Lorenzo and his primary beneficiary died in a common accident. It was established that the
primary beneficiary died before Mr. Lorenzo, and there are no contingent beneficiaries named.
To whom will the proceeds of Mr. Lorenzo’s life insurance policy be paid?
a. The estate of the primary beneficiary
b. The estate of the insured
c. Both the estates of the insured and primary beneficiary on a 50/50 percent basis
d. A court of law

b. The estate of the insured

96

The life insurance business relies on the following, except:
a. The level of first year commission
b. Pressure selling
c. The use of effective needs selling
d. Agent’s service oriented attitude

b. Pressure selling

97

Which of the following are requirements in reinstating a policy after it has lapsed for nonpayment of premiums?
a. Payment of all overdue premiums
b. Application for reinstatement within the specified time
c. Evidence of insurability and payment of interest on overdue premiums
d. All of the above

d. All of the above

98

What source of information will an insurance company not consider from a client pertaining to
insurability?
a. Medical examination report
b. Government tax records
c. Agent’s inspection report
d. The applicant’s personal appearance

b. Government tax records

99

The grace period provision in life insurance policies is designed to ____.
a. Compel the insured to pay premiums more promptly
b. Permit the company to extra charges
c. Give the insured more time to pay the premium while coverage remains in-force
d. Terminate the contract of insurance automatically

c. Give the insured more time to pay the premium while coverage remains in-force

100

In most cases, what will happen to a policy loan that has not been repaid at the time of the
insured’s death?
a. It will be charged to the person responsible for paying the debts of the insured.
b. It will be collection from the life insurance company’s reserve.
c. It will be written off against the insurance company under the terms of the premium
loan repayment option.
d. It will be deducted from the proceeds of the policy when the death claim is paid.

d. It will be deducted from the proceeds of the policy when the death claim is paid.

101

The Insurance Code specifies that a contract does not take effect unless:
a. The policy is delivered to an insured, his assignee, agent, or beneficiary
b. Payment of the first premium is made to the insurer or its authorized agent
c. No change has taken place in the insurability of the life to be insured between the time
the application was completed and the time the policy was delivered
d. The insured has named no fewer than two beneficiaries in the policy

b. Payment of the first premium is made to the insurer or its authorized agent

102

In personal accident and/or sickness contracts, what does “blanket policies” refer to?
a. Group insurance covering loss from specific hazards, incidental to or related to
particular activities
b. Insurance covering all hazards
c. Insurance for all types of hospital and health care expenses
d. None of the above

b. Insurance covering all hazards

103

A man is about to retire. He has Ps. 100,000, which he wishes to use to provide income for
himself as long as he lives, and which would continue to his wife, as long as she lives after his
death. Which of the following will you sell him?
a. Retirement income endowment
b. Straight life annuity
c. Cash refund policy
d. Joint and survivorship annuity

d. Joint and survivorship annuity

104

All of the following statements about Group Insurance are true, except:
a. Each covered employee receives a policy.
b. A covered employee who terminates his employment continues to be covered for 31
days after termination date.
c. In a non-contributory plan, 100% of the group members must be included.
d. Most group policies pay dividends to employer.

a. Each covered employee receives a policy.

105

Daniel failed to disclose that he is already a high-risk candidate for high blood pressure during
the initial years of the policy. How will his contract be affected by such information?
a. Void from the beginning
b. Valid unless the insurer can prove fraud
c. Valid if the insurer issues a policy which is delivered to the applicant
d. Voidable by the insurer if it has been in force less than 2 years

d. Voidable by the insurer if it has been in force less than 2 years

106

In developing a life insurance policy, the company must accumulate from premium payments
a fund required to meet the contract obligations. What is this fund?
a. Dividend fund
b. Policy reserve
c. Accrued discount
d. Contingency fund

b. Policy reserve

107

What is Retirement Annuity?
a. An arrangement where a person can pay a Life Insurance Company a sun of money in
return for pension for life
b. A special kind of medical examination that has be to repeated every year
c. A kind of regular annual savings arrangement to provide a pension for life with no life
coverage
d. A one-time payment for a pension to start as a predetermined date

c. A kind of regular annual savings arrangement to provide a pension for life with no life
coverage

108

What insurance company is owned and controlled by the policy owners who also share in the
earnings of the insurance company in the form of dividends?
a. Stock company
b. Foreign company
c. Domestic company
d. Mutual company

d. Mutual company

109

An agent is prohibited from doing all of the following practices except to:
a. Alter an application without the applicant’s prior written approval
b. Convince a prospect to cancel his policy in one insurance company to buy a policy from
the insurance company represented by the agent
c. Refund some of his commission to his client
d. Make complete comparison of the policies he sells and those offered by competing
insurance companies

d. Make complete comparison of the policies he sells and those offered by competing
insurance companies

110

. Margaux is the beneficiary of her dad’s insurance policy. When it was time for her to make a
claim, she was offered different options, which of these settlement options does not apply to
her?
a. Payment of the proceeds over a fixed period
b. Payment of the proceeds for the life of the insured
c. Payment of the proceeds in fixed amounts until exhausted
d. Proceeds held by the company, with interest payable to the beneficiary on request

d. Proceeds held by the company, with interest payable to the beneficiary on request

111

Neal and his wife have a whole life and endowment policies respectively, that is why they are
both assured that certain minimum policy benefits will remain with them even under certain
changed conditions. Which non-forfeiture provision holds true with the given situation?
a. Any guaranteed policy values will belong to the policy owner even if premium payments
are discontinued
b. No death claim will be denied for any misstatement on the application
c. The premium on the policy will remain the same even when another beneficiary is
added to the policy
d. The face amount of the policy will remain the same even if the insured’s health becomes
impaired

a. Any guaranteed policy values will belong to the policy owner even if premium payments
are discontinued

112

In determining the number of people dying or living at a particular age within a given period,
which principle do we use?
a. Probability
b. Insurable Interest
c. Mortality Table
d. Risk Sharing

a. Probability

113

Simon named his mother as primary beneficiary and his brother as secondary revocable
beneficiary for his Ps. 20,000 policy. Which of the following applies to this situation?
a. Upon the insured’s death, the primary and secondary beneficiaries shall each receive
Ps. 10,000
b. The designation of a contingent beneficiary is subject to the primary beneficiary’s
approval
c. Any policy loan assignment will require the primary beneficiary’s approval
d. The insured can add a third beneficiary at any time

d. The insured can add a third beneficiary at any time

114

What is the restriction when the death benefit of a policy is restricted in amount during the
early years of the policy?
a. Rate adjustment
b. An increasing death benefit
c. A lien
d. A subtractive clause

a. Rate adjustment

115

When does the insured person receive the full face amount himself?
a. When he becomes 65 years old in the case of a whole life policy
b. On the date of maturity in the case of endowment policy
c. Only if he lives to 100 years old in the case of an endowment
d. When he becomes 65 years old in the case of limited pay life

b. On the date of maturity in the case of endowment policy

116

All of the following statement regarding a life insurance application are correct, except:
a. Misstatement of material facts could void the policy during the contestable period
b. It must be signed by the applicant
c. Usually, it will be made a part of the policy
d. Statements made on the application are warranties

d. Statements made on the application are warranties

117

All of the following are Standard Provision of a life insurance policy, except:
a. A misstatement of age clause
b. A grace period clause
c. An automatic premium loan clause
d. An entire contract clause

d. An entire contract clause

118

If a policyholder wants to get the maximum immediate value from non-participating policy by
surrendering it, which of the following would he get?
a. Cash value
b. Loan value
c. Extended term insurance
d. Accumulated dividend

a. Cash value

119

The premium on a participating life insurance policy is ___.
a. The same as an non-participating policy
b. Greater at younger ages
c. Lower than a non-participating policy
d. Higher than a non-participating policy

d. Higher than a non-participating policy

120

In a case where the premium has not been paid and the cash value has been exhausted,
which of the following can the policy still avail of?
a. Automatics premium loan provision
b. Reinstatement provision
c. Extended term insurance
d. Grace period

b. Reinstatement provision

121

A prospect tells you that he wants to be insured for life at the least annual cost until he dies.
What would you offer him?
a. A 20-pay life policy
b. A whole life policy
c. A term policy
d. Endowment policy

b. A whole life policy

122

You visit a prospect who tells you that he does not believe in life insurance because, when his
mother died, he was the beneficiary under her life policy. Most of the money when to pay
Estate Taxes because her agent made a mistake. Only this man and his sister were named in
the policy. Which of the following did they fall under?
a. Absolute assignee
b. Irrevocable primary beneficiary
c. Revocable secondary beneficiary
d. Revocable primary beneficiary

c. Revocable secondary beneficiary

123

All of the following apply under the beneficiary provision, except:
a. An irrevocable beneficiary’s interest is very similar to that of an absolute assignee
b. The beneficiary must notify the company of the insured’s death within 24 hours
c. The beneficiary can only receive the policy proceeds if he alive at the time of the
insured’s death
d. The interest of a contingent beneficiary remains inoperative during the lifetime of the
insured

b. The beneficiary must notify the company of the insured’s death within 24 hours

124

In theory, endowment insurance is a combination of what?
a. Level term and whole life
b. Level term and pure endowment
c. Increasing term and whole insurance
d. Increasing term and decreasing whole life

b. Level term and pure endowment

125

Pad-up additions options is one of the following features available in a participating policy.
Which of the following is true about paid-up additions?
a. Don’t affect the cash value of the policy
b. Don’t affect the loan or cash value of the policy
c. Affect both cash and loan value of the policy
d. Only affect the cash value of the policy

c. Affect both cash and loan value of the policy

126

A misrepresentation in the application form is considered to be material if ____.
a. The insurance company would have altered its risk appraisal decision had the truth been
known.
b. The Insurance Commission disregard the misrepresentation.
c. The insured died during the contestable period.
d. The misrepresentation is subsequently discovered by the insurance company

a. The insurance company would have altered its risk appraisal decision had the truth been
known.

127

Harry made a policy loan to pay for the tuition fees of his children. After a year, he is still
unable to pay for the loan. What will the insurance company do?
a. Increase the present loan by the interest
b. Demand full settlement of the loan
c. Refuse to grant future additional loan
d. Terminate the contract

a. Increase the present loan by the interest

128

The company uses the information on a life insurance application relating to an applicant’s
birthday, occupation, and avocation primarily for what purpose?
a. Appraising the risk
b. Assigning the risk
c. Determining the insurable interest
d. Determining a suitable plan of insurance

a. Appraising the risk

129

A client has a policy with you for Ps 1,000,000, which is payable to his estate, and he tells you
that he wants his wife to receive the money free from Estate Tax. What would you
recommend?
a. Appoint an irrevocable beneficiary
b. Take a new policy with the bank as a third party
c. Make an absolute assignment
d. Make a collateral assignment

a. Appoint an irrevocable beneficiary

130

Which of the following statements best describes the Automatic Premium Loan Provision?
a. A provision whereby the company automatically pays the premium out of the loan value
and charges it as a loan to the insured, if said premium due is not paid within the grace
period
b. A provision whereby one life insurance company will guarantee payment of the
premium to another life insurance company
c. A provision whereby a loan up to the amount of the annual premium is automatic
d. A provision whereby the company lends the insured the amount of a premium to assure
that the non-forfeiture options will be paid

a. A provision whereby the company automatically pays the premium out of the loan value
and charges it as a loan to the insured, if said premium due is not paid within the grace
period

131

. Most binding receipts have the following provision, except:
a. An acknowledgement of the receipt of the initial contractual premium
b. A minimum amount of coverage
c. The right of the company to terminate the initial coverage if the application is
disapproved by the company
d. There is a confirmation of payment

b. A minimum amount of coverage

132

. Non-productive agents in a company affect
a. Investment yield
b. Risk sharing
c. Expense
d. Profit allowance

c. Expense

133

A housewife without gainful employment applies for Ps 500,000 life coverage. Which of the
following should the agent do?
a. Suggest she doubles the amount
b. Tell her she has no need for it
c. Be grateful
d. Examine the adequacy of the husband’s insurance coverage

d. Examine the adequacy of the husband’s insurance coverage

134

An individual, at age 35, purchases a policy under which he, in 20 years, will receive the face
amount of the policy himself, if he is alive at that date. This policy is obviously a ____.
a. 20-pay life
b. 20-year endowment
c. 20-year term
d. None of the above

b. 20-year endowment

135

One supplementary benefit offered is a payor’s benefit, which is intended to ____.
a. Provide a waiver pf premium benefit in the event of death or disability of the person
paying the premiums
b. Provide for the returns of premiums to an adult payer in the event that a minor insured
dies
c. Assure that the adult payor will retain a vested interest in the policy when the insured
reaches the age of majority
d. Allow the insurance company to pay the policy’s proceeds to the person who seems
equitably entitled to the proceeds

a. Provide a waiver pf premium benefit in the event of death or disability of the person
paying the premiums

136

Because the renewal of a term life insurance policy presents an increased possibility of antiselection, it is customary for the insurance company to ____.
a. Require some evidence of insurability each time that policy is renewed
b. Charge higher premium rates for term policies that are renewable than those that are
not renewable
c. Restrict the policy owner’s right to change the beneficiary of a renewable term policy
d. Define insurable interest more strictly for term policies than for other policies

b. Charge higher premium rates for term policies that are renewable than those that are
not renewable

137

When the beneficiary of a life insurance policy has been designated irrevocably, the policy
owner must obtain the consent of the beneficiary in order to:
I. Name a different person to receive policy benefits
II. Obtain a loan under the policy
III. Surrender the policy for its cash value
IV. Elects the extended term non-forfeiture option
a. All of these
b. I, III, and IV
c. I, II, and III
d. II, III, and IV

a. All of these

138

Mr. Kho’s participating whole life insurance policy includes a waiver of premium for disability
benefit. During the period when premium payments are being waived under this provision,
the cash value of this policy will ____.
a. Remain the same, and Mr. Kho will continue to receive policy dividends
b. Decrease, but Mr. Kho will continue to receive policy dividends
c. Stop increasing for the term of the rider
d. Increase, and Mr. Kho will continue to receive policy dividends

a. Remain the same, and Mr. Kho will continue to receive policy dividends

139

Anti-Selection refers to a general tendency on the part of ____.
a. Agency managers to discriminate between loyal agents and disloyal agents
b. Applicants for life insurance to opt for inexpensive plans of insurance
c. Persons with impaired insurability to be more keen in obtaining insurance coverage than
those persons who are in good health
d. Agents to call those prospects who state no obligations to life insurance

c. Persons with impaired insurability to be more keen in obtaining insurance coverage than
those persons who are in good health

140

The basic coverage provided by life insurance policies may be supplemented by separate
provisions that provide coverage for additional amounts or of a different nature. Collectively,
these provisions are known as ____.
a. Riders
b. Dividends
c. Assignment
d. Deposit privileges

a. Riders

141

What is a policy that is in force for less than the original sum assured with no indebtedness
has availed of?
a. The Reinstatement Provision
b. Grace Period
c. Paid-Up Insurance Option
d. Cancellation

c. Paid-Up Insurance Option

142

Philip bought a policy on the life of his wife and was not able to clarify to the insurance
company that his wife was a year older when they bought their life insurance policy. What
will the insurance company pay in case his wife dies?
a. The face amount adjusted for misstatement of age
b. Slightly less than the face amount
c. The sum of the premium paid
d. The face amount

b. Slightly less than the face amount

143

Paul has recently retired and now wants to pass his present life insurance policy which is
payable to his estate to his son who will assume the premium payments. Which of the
following will he have to appoint his son to achieve his desire and protect him from Estate Tax
Liability?
a. Absolute Assignee
b. Irrevocable primary beneficiary
c. Revocable primary beneficiary
d. Irrevocable secondary beneficiary

a. Absolute Assignee

144

A policy is approved with this rating when the insured has a higher than average chance of
dying prematurely due to varying degrees of impairments.
a. Standard Rate
b. Substandard Rate
c. Decline
d. Postpone

b. Substandard Rate

145

John is young professional who loves sports. He engages in combat sports such as Kickboxing
and MMA on his leisure time as his fitness routine. He tries to keep himself fit and does not
take on any vices except for occasional drinks with friends. What could be his rating should he
apply for a life insurance?
a. Standard Rate
b. Substandard Rate
c. Decline
d. Postponed

b. Substandard Rate

146

Mr. Sanchez has been with his partner for more 20 years, since he and his wife separated.
Though he and his wife had remained friends, they agreed that they would no longer have
interest in each other’s assets after the separation. With this, Mr. Sanchez wishes to name
his long-time partner to be his beneficiary. Can he do this?
a. Yes, because he has been together for so long.
b. Yes, because Mr. Sanchez and his wife has already agreed not to make any claim should
anything happen
c. No, because common-law spouse may not be nominated as beneficiary as per Philippine
Law
d. No, because they don’t have children

c. No, because common-law spouse may not be nominated as beneficiary as per Philippine
Law

147

In the event of an insured death, his common-law spouse filed for claim to his insurance.
Since they were never married because of the insured’s previous marriage, the common-law
spouse’s claim was denied. His parents were nominated as his beneficiary, but the insured
outlived them. Where will the insured’s insurance proceeds go?
a. To his siblings
b. To his legal wife
c. To the insured’s estate
d. To the state

c. To the insured’s estate

148

What does a person have when he, the beneficiary, suffers financial loss caused by the death
of the insured?
a. Anti-selection
b. Speculation
c. Insurable Interest
d. Qualification

c. Insurable Interest

149

Sancho and Bong have been business partners for 5 years. Last year, they decided to set up
a convenience store together. Can Sancho nominate Bong as his beneficiary when he applies
for a policy?
a. Yes, because they are living together. They are common-law partners.
b. Yes, because they are business partners, but Bong should also have a cross-insurance
naming Sancho as his beneficiary.
c. No, because Philippine law does not recognize same-sex relationships and marriages.
d. No, because they are not technically related

b. Yes, because they are business partners, but Bong should also have a cross-insurance
naming Sancho as his beneficiary.

150

This type of life insurance provides lifetime protection with premiums payable in limited
number of years, with cash values, and dividends. The face amount is paid when the insured
dies, or reaches the age of 100, whichever comes first.
a. Level Term Plan
b. Regular Whole Life Plan
c. Limited Pay Life Plan
d. Regular Endowment Plan

c. Limited Pay Life Plan

151

Which of the following provides protection in a specified period, and pays only the face
amount in the event of death.
a. Limited Pay Life Plan
b. Term Plan
c. Whole Life Plan
d. Endowment Plan

b. Term Plan

152

What increases yearly which is based on the insured’s attained age?
a. Natural Premium
b. Level Premium
c. Death Benefit
d. Living Benefit

a. Natural Premium

153

If the premium has not been paid and the cash values have been exhausted, the grace period
provision still applies. TRUE OR FALSE?

FALSE

154

According to the law of large numbers, events which happen seemingly by chance will actually
be bound to follow a predictable pattern, if enough such happenings are observed. TRUE OR FALSE?

TRUE

155

Anti-selection occurs when persons in good health wish to buy insurance. TRUE OR FALSE?

FALSE

156

If policy is still in force for the full face amount and will remain in force for a further period of
four years and 117 days, without the payment of any premiums, this implies that the owner has
availed of the paid-up insurance option. TRUE OR FALSE?

FALSE

157

In the case of misstatement of age, the amount of insurance will not be adjusted to the
amount which the premium paid at the correct age would have purchased. TRUE OR FALSE?

FALSE

158

A participating endowment is a policy that provides guaranteed cash values plus extra annual
distributions and pays the insured after a specified time. TRUE OR FALSE

TRUE

159

In a group insurance it is assumed that every member of the group is insurable, provided that
every member of the group is working a minimum number of (usually 60 hours) each week. TRUE OR FALSE

FALSE

160

An endowment at age 66 policy with premium payable for a limited period of 20 years pays the
full amount after 20 years. TRUE OR FALSE

FALSE

161

In most life insurance applications, the largest amount of information requested is data which
identifies the applicant. TRUE OR FALSE

FALSE

162

A misstatement of the assured’s age does not make the policy a void contract. TRUE OR FALSE

TRUE